Central banks around the world are accelerating their studies on the issuance of digital currencies that can be used in the same way as paper money and coins. Against this backdrop, Japan learned that the Ministry of Finance will launch a new panel of experts on the "digital yen" in April to study the feasibility of issuing a digital yen.

Central banks in Europe, the United States, China, and other countries are conducting research on electronic money that can be used in the same way as banknotes and coins currently in circulation, and the Bank of Japan will conduct a pilot experiment of the "digital yen" in April with the participation of a wide range of private businesses such as banks.

According to those involved, the Ministry of Finance has decided to set up a new panel of experts in April regarding the "digital yen."

Based on the technical verification conducted by the Bank of Japan for two years until March, the meeting is expected to summarize issues such as the framework for institutional design and consider the feasibility of future issuance.

The Bank of Japan has not decided on a plan to issue a digital yen at this time, but if a "digital yen" is issued in the future, banknotes and coins will be replaced by digital, which may significantly change people's lives and economic activities.

However, it is expected that it will take time to discuss the design of the system, including the development of related laws, and the Ministry of Finance intends to respond to future changes in the environment by making preparations while referring to the opinions of experts participating in the expert meeting.

History of the "Digital Yen"

Digital currencies that central banks around the world, such as the Bank of Japan, are researching are called CBDCs, taking the acronym "Central Bank Digital Currency" in English.

Since banknotes and coins are supposed to be managed digitally and exchanged on smartphones, etc., if they are issued in the future, they may significantly change people's lives and economic activities.

In 2020, the Bank of Japan established a joint group to study digital currencies at a total of six central banks, including the European Central Bank and the Bank of England.

While the Bank of Japan has stated that it has no plans to issue a digital yen at this time, it has been conducting technical verification of the digital yen for some time and plans to conduct a pilot experiment from April.

The
experiment is scheduled to last for several years, and participants will be recruited from a wide range of private sectors, including banks and other financial institutions and
payment providers.

In addition,
in addition to confirming issues related to connecting to external systems,
▽ meetings will be held to discuss issues.

On the other hand, in the "Basic Policy" compiled under the Kan Cabinet at the time, the government stated that "the government and the Bank of Japan will organize the outline of the system design based on the results of the proof of concept to be conducted by the middle of fiscal 6, and proceed with pilot experiments and consideration of the feasibility and legislative aspects of issuance" regarding digital currencies of central banks.

Europe, the United States, Asia, etc. Active discussions for publication

Regarding digital currencies = CBDCs issued by central banks, discussions for the issuance of CBDCs are becoming active in Europe, the United States, Asia, and other countries.

Central banks around the world accelerated CBDC research in 2019 when American IT giant Meta and Facebook at the time announced plans to issue crypto assets that can be used for remittances across borders, and the need for digital currencies circulating around the world was strongly recognized. META has abandoned this plan because it is not expected to issue it in the future.

Currently, China is said to be leading the way in practical application, and an experiment of the "digital yuan" was conducted at the venue of the Beijing Olympics held in February last year.

Also, in the United States, last year, the Fed = Federal Reserve released the first report on the "digital dollar".

Meanwhile, in Europe, the European Central Bank is expected to decide whether to issue it this year, and India is also planning to issue it, and countries and regions around the world are gaining momentum.